Ecosystems services
Global ecosystems are under severe stress. Ecosystem degradation is highly relevant to business because companies not only impact ecosystems and the services they provide - such as water purification and supply, carbon sequestration and air purification - but they also depend on them. Increasingly, competition for these diminishing resources is driving the emergence of Payment for Ecosystem Services (PES) programmes, also known as "green" markets.
PES programmes offer payments to those who provide ecosystems services, conditional upon them exhibiting acceptable conservation performance. The past successes of carbon and other markets for environmental commodities (eg water, SO2 and NO2) have demonstrated the potential for using investment based solutions to internalise the external costs of pollution, natural resource exploitation, and unsustainable development.
We are a major user and owner of land, biodiversity and water resources. This can present significant risks to our operations when coupled with the changing ecosystem service legislative frameworks. Three of the most significant risks include biodiversity compensation (through offsetting), rights to access and use water, and mitigation and offsetting of our carbon emissions. These present both financial and reputation threats but also opportunities for our operations. Without a rigorous management process, the business risk we face will continue to grow significantly.
- Approach
- Value assessments
In 2009 we formalised a programme to explore the threats and opportunities for the Group arising from emerging green markets in biodiversity, carbon, water and other ecosystem services.
The Natural Capital Project has begun exploring the ecosystem service values of our extensive non operational landholdings. Through our collaboration with the IUCN economics group we have undertaken a preliminary assessment of the biodiversity value of forest conservation projects in Madagascar. This groundbreaking work is being developed as a pilot project as part of the WBCSD Ecosystem Valuation Initiative. Rio Tinto also sponsored an IUCN paper on the cost of Reducing Emissions from Deforestation and Degradation (REDD). This paper was published as part of the Copenhagen Climate Change discussions in December 2009.
As part of the Natural Capital project we are also engaging in external initiatives such as the WRI Corporate Ecosystem Service review and the BSR Environmental Markets Initiative.
